Are CEOS Really Paid Like Bureaucrats?
Posted: 13 Aug 1998
Date Written: 1997
A common view is that there is little correlation between firm performance and CEO pay. Using a new 15-year panel data set of CEOs in the largest publicly traded U.S. companies, we document a strong relationship between firm performance and CEO compensation. This relationship is generated almost entirely by changes in the value of CEO holdings of stock and stock options. In addition, we show that both the level of CEO compensation and the sensitivity of compensation to firm performance have risen dramatically since 1980, largely because of increases in stock option grants.
JEL Classification: G3, J3, L2
Suggested Citation: Suggested Citation